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Inside Washington (11/24/2009)

* WASHINGTON (11/25/09)--Rep. Ron Paul (R-Texas) has indicated that he will not support legislation to curb systemic risk, even though he proposed an amendment that will be attached to the bill aiming to toughen oversight of the Federal Reserve Board (American Banker Nov. 24). Paul’s amendment, which the House Financial Services Committee approved last week, would subject the Fed to audits from the Government Accountability Office. The Fed opposes the measure because it argues that audits would compromise the independence of monetary policy. But Paul said the amendment does not have anything to do with running monetary policy but rather finding out what the Fed is doing and how it is spending money ... * WASHINGTON (11/25/09)--A report Monday picked out six large and midsize banks that are most likely to expand through failed-bank acquisitions (American Banker Nov. 24). The banks are: BB&T Corp., New Alliance Bancshares Inc., People’s United Financial Inc., New York Community Bancorp, Washington Federal, and U.S. Bancorp. The report was issued by FBR Capital Markets. Analysts said the companies would be attracted to the low costs and high earnings potential of acquiring failed institutions with help from the Federal Deposit Insurance Corp., which has pledged to cover some of the closed institutions’ losses ... * WASHINGTON (11/25/09)--Critics of a plan to handle oversight of systemically significant financial companies said the bill does not address how the Federal Reserve Board and an interagency council would interact. Senate Banking Committee Chairman Christopher Dodd (D-Conn.) has proposed giving the oversight to an interagency council, while the Obama administration has proposed giving the power to the Federal Reserve Board. It’s unclear [in the bill] who is going to do what, said William Isaac, former Federal Deposit Insurance Corp. chairman. Isaac also questioned what would happen if the council and the Fed disagreed on an issue. The Fed and the council don’t have “defined responsibilities,” added Gil Schwartz, a former Fed lawyer. Congress should settle on a solution, said Oliver Ireland, also a former Fed lawyer. The combo is “confusing,” and could create friction, he told American Banker (Nov. 24) ...